The Current Economic Situation Of The Euro Area - 1161 Words

The Current Economic Situation in the Euro Area The euro area, which will hereafter be referred to as the Eurozone, remains in a state of post-recession recovery. Following the financial crisis that began in late-2008 in the United States and the ensuing global fallout, the Eurozone had an economic crisis of its own that is known as the sovereign debt crisis. Precipitated by the vast debt a number of Eurozone constituent countries had accumulated with respect to their GDP, the sovereign debt crisis involved risk of default in several countries and a series of bailouts to some. Economies shrank as GDPs declined, unemployment rose, and deflation occurred. To combat this crisis, in addition to the aforementioned bailouts, the European Central Bank, which will henceforth be called the ECB, drastically lowered interest rates and engaged in the unconventional practice of buying securities as one way to accomplish this. Through its program known as Outright Monetary Transactions (OMT), the ECB offered to purchase government debt (from private banks) of member states that request assistance. Due to the associated conditionality, however, it was never implemented across the entire Eurozone. Also created by the ECB was long-term refinancing operations (LTROs) program in which long-term, low-interest loans were made to Eurozone banks and used government bonds and other securities as collateral. However, the Eurozone is a region of great contrast, whichShow MoreRelatedChadwick983 Words   |  4 PagesEuro Challenge 2012 The Current Economic Situation The Euro Area Economic Situation – March 2012 The euro area economy as a whole contracted (i.e., growth was negative) at the end of 2011. In 2012, the euro area will likely undergo a mild recession (a period of negative growth) but is expected to stage a gradual recovery in the second half of this year. Already, there are signs of stabilization, and recent measures taken by the ECB and European leaders are helping to overcome the euroRead MoreGroupe Ariel Sa Case Essay1170 Words   |  5 Pagesmind the exchange rates between Mexican Pesos and Euros in order to maximize their return. They also need to keep in mind the inflation rates over time and the risks involved with this type of investment. Analysis Number 1. Groupe Ariel is recycling old equipment in Mexico. They will need to use pesos to calculate their cash flows to see how this part of their project will impact their finances. They also need to convert this peso amount into Euros. We began the analysis by computing the Net PresentRead MoreFactors Affecting The Foreign Exchange Market1008 Words   |  5 Pagesan impact on currencies. The effect of these factors is reflected in the nation’s current account balance, so it’s worth watching and analyzing. When we speak about forecasting the future values of currencies, it’s necessary to watch the central banks’ policy in the first place. Central banks make decisions which set trends at the foreign exchange markets. These institutions have far more information about the economic state and developments. So, following central banks pretty much comprises informationRead MoreThe Should A Solitary Currency For Europe Has Come From The Following Six Major Factors1569 Words   |  7 Pagesplatform for carrying out internal trades within the Euro zone itself. This would also result in greater transparency in currency transactions across the individual country borders, as the underlying currency would now be the same. Fourthly, it was also needed to give the citizens of the European Union, stability in terms of prices, more choices and range in products. For any economical shock that would be experienced by the external world economies, the Euro zone would be more immune, and have enhancedRead MoreGreek Government s Debt Has Been Around Since 20101346 Words   |  6 Pagesentered the Eurozone. There are several events that led to Greece being bankrupt, but for a better understating let’s start in the year 2001. This year they entered the Eurozone, which is one of the biggest economic regions that consists on all the European Union countries and its currency is the euro. Two years later people found out that Greece â€Å"cooked their books† in order to enter the Eurozone, meaning that Greek altered its numbers and debt. Entering the Eurozone might have been their biggest mistakeRead MoreIs a Common Currency in Europe Sustainable? Essay1701 Words   |  7 Pagesnations and even the United States. Originally designed to ensure financial stability, the common currency area appears to restrain policymakers both fiscally and monetarily in these times of economic depression when they might benefit most from expansionary policies. A key problem exists with the European Central Bank dictating a unified monetary policy for states experiencing different economic scena rios. How could the European Central Bank effectively meet the needs of Greece and Italy by providingRead MoreFederal Reserve Bank Of New York Essay1620 Words   |  7 Pages(credits) and liabilities (debits) should balance; however, in the reality, this is rarely the case. The BOP is divided into 3 main categories: the current account, the capital account, and the financial account (Reem Heakle, 2015). 1. The Current Account The current account refers to the export and import of goods and services into a country. Within the current account are credits and debits on the trade of merchandise, including goods such as raw materials and manufactured goods that are bought, soldRead MoreThe Balance Of Payment ( Bop ) Essay1621 Words   |  7 Pagesassets (credits) and liabilities (debits) should balance; however, in the reality, this is rarely the case. The BOP is divided into 3 main categories: the current account, the capital account, and the financial account: 1. The Current Account The current account refers to the export and import of goods and services into a country. Within the current account are credits and debits on the trade of merchandise, including goods such as raw materials and manufactured goods that are bought, sold or givenRead MoreThe Eurozone And Its Impact On The European Economy952 Words   |  4 Pagesrecently, it was believed that the euro provided a stable currency with low inflation and low interest rates and encouraged sound public finance. That the use of a single currency increases price transparency, eliminates currency exchange costs, oils the wheels of the European economy, facilitates international trade, and gives the European Union a more powerful voice in the world. That the size and strength Eurozone would better protect it from external economic shocks, and provide the EU’s citizensRead MoreThe European Union: Economics, Policy and History’ by Susan Senior Nello1737 Words   |  7 Pagesessay is called ‘Th e European Union: Economics, Policy and History’ by Susan Senior Nello. This book takes into account the different disciplines of economics, policy-making and therefore including a great deal of politics, and the history of the institution of the European Union as we know it today. The broad multi-disciplinary perspective makes this a comprehensive book that combines different aspects together making this particularly useful in the current debate about the future of the European